Property tax increases on rental properties

[Jeff Brenot]

Hello BP, 

I am evaluating a 4-plex in the Austin, TX area. The last tax assessment was for $395k in 2015 (~$9k taxes based on 2.2% tax rate). However, in the meantime, a similar property to the one I am evaluating sold for $665k after rehab. The list price for the property I am evaluating is ~$625k. I am super nervous that the taxes will skyrocket. I have run the numbers at $9k property tax and cash flow is very good. However, if the county increases taxes to based on the recent comps, they could be upwards of $14k annually which would eat into cash flow significantly. 

I do plan to be an owner occupant and could potentially homestead it down the road. However, is there anything I can do to prevent the taxes from skyrocketing if I purchase for anywhere close to $625k? Are property taxes usually increased gradually or can they jump up significantly all at once? I would appreciate any additional information I should be aware of. Thank you!